Morningstar 2025 Q3 Earnings Revenue Beats Expectations, Net Income Declines

Morningstar (MORN) reported its fiscal 2025 Q3 earnings on October 31, 2025, with total revenue rising 8.4% year-over-year to $617.40 million. While the company’s EPS declined 21.9% to $2.18, it set a new record high for Q3 net income in over two decades. Shares have dipped 3.3% weekly and 6.48% month-to-date, reflecting mixed market sentiment.

Revenue

License-based revenue led the charge, contributing $435 million, while asset-based and transaction-based segments added $84.70 million and $97.70 million, respectively. Morningstar Direct Platform and PitchBook drove consolidated growth, supported by strong performance across asset classes and geographies.

Earnings/Net Income

Despite a 21.9% decline in EPS to $2.18, Morningstar’s net income of $91.60 million marked a record high for the quarter, albeit down 23.5% year-over-year. The drop in earnings reflects a prior-year gain from the sale of its Commodity and Energy Data business.

CEO Commentary

Kunal Kapoor, CEO and President, highlighted Morningstar Credit’s “standout quarter” and the planned acquisition of the Center for Research in Security Prices (CRSP), which will enhance Morningstar Indexes’ scale. He emphasized strategic investments in data integration with generative AI platforms and product innovations like medalist ratings for semiliquid funds.

Guidance

Morningstar provided no explicit forward-looking revenue or EPS guidance for upcoming quarters. However, the company reiterated its focus on organic growth through product innovation and strategic acquisitions.

Additional News

1. M&A Activity: Morningstar announced a $375 million acquisition of CRSP from the University of Chicago, bolstering its index offerings.


2. Share Buybacks: The company completed a $500 million share repurchase program and authorized a new $1 billion buyback initiative.


3. Dividend Policy: Morningstar maintained its quarterly dividend at $0.47 per share, reflecting confidence in stable cash flow.

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Post-Earnings Price Action Review

The backtest of a strategy to buy MORN shares on revenue beats and hold for 30 days shows mixed results. In Q3 2025, a $208.83 entry on October 29 yielded a 1.67% gain by October 31, though data beyond November 28 remains unavailable. Historical analysis of Q2 2025 (1.4% revenue beat) suggests a 2.5% hypothetical gain over 30 days. However, recent underperformance—36.55% YoY stock decline—highlights risks from competitive pressures and macroeconomic headwinds. The strategy’s 100% win rate over two quarters is offset by limited data, urging investors to consider diversification and risk mitigation. <visualization dataurl="https://cdn.ainvest.com/news/visual/visual_components/viz_82o4014e.json"></visualization>

Key Risks:

- Competition: Intensifying rivalry in financial data services.

- Regulatory Shifts: Potential impacts on margins from industry changes.

- Liquidity: Moderate trading volume may affect execution.

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